Monday, February 14, 2011

When Free Really Isn't

Imagine a valuable service, that is being given away for free, that people are willing to travel across international borders to pay for the privilege of getting that same service elsewhere. What horrible miscegenation of economics would this be? If you guessed universal health care as practiced by our Canadian friends, you would be correct. On a tip from Carpe Diem, I read some of the following in the Victoria Times Colonist (got to love the old school newspaper name)

Cross Border Access has been helping Canadians book appointments and negotiate fees for a variety of procedures in upstate New York since May. . . Among his competitors is B.C.-based Timely Medical Alternatives — one of the first and most successful brokers — which makes its money by charging a mark-up and has recently waded into the controversial area of paying physicians for referring patients. “A lot of our business comes from doctors who refer their patients to us because their hands are tied as far as being able to get them surgery,” he said. “It’s in the patient’s best interest that they get speedy surgery almost always and ... we’re happy to pay for that.” Baker said he’s helped thousands of people secure treatment since opening for business in 2003, most of them from Alberta, B.C., Ontario and Saskatchewan. Noting business last year has more than doubled over 2009, he’s not surprised to learn another company has emerged with a new twist on the medical brokerage model, but insists his service is tough to beat.
I believe this is a cautionary tale for Obamacare. With or without the individual mandate, the system is designed to create a demand health care that will not be met because prices will not be allowed to rise to remunerate those who are providing medical care. Simply put, Obamacare tries to defy laws of physics as immutable as the laws of physics, increasing the demand for a service through subsidy while imposing price controls and expecting the delivery of more of the service. A secondary market in medical services is bound to spring up, prompting another liberal call for more "reform" of a system that they have already poisoned.

While the argument on the constitutionality of the individual mandate is important because a favorable ruling would help preserve our liberties, I actually don't think it changes the calculus of the PPACA significantly. The penalties are set too low with too little enforcement to be effective anyway. The real issue is whether the Supremes will give Congress a pass on severability, even though it was not placed into the original law. Highly likely they will, based on past behavior.

That means that the current Congress must start the repeal by starving the commissions and bodies necessary to implement the bill. Darrell Issa must investigate chicanery like moving some of the organizational locations of commissions into unrelated parts of the bureaucracy associated with medicare to protect them from defunding. The states should refuse participation in the exchanges. Karl Rove has an interesting article in the WSJ about how Republicans can kill most of the rest of the legislation without 60 Senate votes after winning the Presidency and the Senate in 2012. They should campaign on this issue.

For example, under reconciliation the Senate Budget Committee could instruct the Senate Finance Committee to reduce mandatory spending on insurance subsidies and Medicaid expansion. These two items make up more than 90% of spending in ObamaCare. All the changes from all the committees are then bundled into one measure and voted upon. Because reconciliation is protected by the rules of the budget process, it doesn't take 60 votes to bring it up and it requires only a simple majority to pass.


  1. As someone with a future in healthcare, I am greatly concerned by Obamacare and all the implications that "universal health care" promises to bring. I think it is very telling that Canadians would pay a premium to get healthcare here.

  2. Makes the Rolling Stone statements by brutally naive Bieber even more face-palm worth...